Last week, an annual Census Bureau report showed that U.S. household formation has been terribly slow with just 476,000 households added last year. A new survey now reveals that non-family household formations are on the rise with more relatives added to the family homes.
Household formation is a major indicator of economic health.
Usually, when the economy is slow, more people start living together with adult children moving into their parents' homes or getting a roommate to split the cost of renting a place. Conversely, when the economy begins to grow, more people move out, buy homes and start their own families, The Wall Street Journal explains.
The new report by housing economist Thomas Lawler revealed that it's not just the adult children moving into their parents' house; relatives and in-laws have also started living together.
Lawler's survey, which sourced data from the Census Bureau household formation report, found that the number of relatives and in-laws added to family homes in 2013 went up two-fold the recent average to 663,000. The number of non-relatives added to a household went up to 372,000 as well.
The year 2013 saw the formation of 164,000 new non-family households (friends, roommates) when compared to the 65,000 recorded between 2010 and 2012.
Lawler calls this phenomenon "doubling up" and though he hasn't been able to put his finger on why the trend is catching, he hopes to put in more research to arrive at the answer. Lawler explains that this trend could threaten the housing market's recovery, MarketWatch reports.
Doubled-up homes aren't just for couch-surfing adult kids (and reluctant parents) anymore https://t.co/Vmui8R6JLR
— MarketWatch (@MarketWatch) September 27, 2014
The lesser the number of family households, the lower will home sales go. More recently, the National Association of Realtors revealed that the number of existing home sales declined for the first time since May in August.
The association also stressed that construction on multi-family homes picked up showing that demand in the rental sector was still high. Experts added that until the employment and wages scenario of the country improved, the growth would remain choppy.
More recently, the Census Bureau said that the median household income in the U.S. rose only by 0.3 percent in 2013 after adjusting for inflation.
"The data released today by the Census Bureau cover the calendar year 2013, and so do not reflect the notable improvement in the labor market seen over the first eight months of 2014," Jason Furman, chairman of President Barack Obama's Council of Economic Advisers, wrote in a blog post when the data was released earlier this month, according to The Financial Times.
